Nike reports earnings after the bell. Here's what Wall Street expects

Nike Tuesday will report quarterly earnings as investors brace for another set of less-than-stellar results. The company announced in September that CEO John Donahoe would step down.

Here's what analysts expect from the world's largest sneaker company for the first quarter of 2025, according to LSEG consensus estimates:

• Earnings per share: 52 cents
• Revenue: $11.65 billion

Analysts expect sales to fall 10% from a year ago and profits to fall by about 45%.

A reset at Nike brings grim vision. Over the past year, it has been accused of lagging behind in innovation and giving share to competitors as it has focused on selling directly to consumers through its own website and stores rather than through wholesalers. Foot Locker And DSW.

In September, Nike announced that Donahoe would step down and be replaced by company veteran Elliott Hill, who would take the helm on October 14.

Under Donahoe's leadership, the company has grown annual sales by more than 31%, but it got there by churning out legacy franchises like Air Force 1s, Dunks and Air Jordan 1s — not the groundbreaking style that made the company a global powerhouse.

In the past few quarters, Donahoe has talked about the need to improve innovation and overhaul Nike's relationship with wholesalers, but the company's board decided that Hill, who spent 32 years with Nike before retiring in 2020, was the right person to lead next. chapter

Donahoe is expected to be present during the company's conference call with investors Tuesday afternoon, but observers will be interested to see if there are any clues about where the company plans to go under Hill's leadership.

The incoming CEO will need to strengthen Nike's innovation pipeline, reset its relationships with wholesalers and improve morale after a series of layoffs and a breakdown in culture.

Overall, the sneaker market has been relatively stagnant in terms of US consumer spending on discretionary products like new clothes and shoes, making Nike's situation more difficult.

According to Euromonitor, footwear sales in the US are projected to grow by just 2% in 2024 compared to 2023, after barely falling between 2022 and 2023. Athletic footwear is expected to grow by about 5.6%, the firm said.

Nike's performance has also been weighed down by the uneven economy in China, Nike's third-largest market by revenue, which will be another key factor to watch for in the earnings report. Nike's performance in China is often an indicator of the region's financial health, and in late June, it warned of a “soft outlook” in the region. However, China's central bank recently unveiled its biggest stimulus package since the Covid pandemic, which is expected to give the region's economy a much-needed boost.

Nike's fiscal first quarter would have ended before those stimulus measures, but executives could share color on how sales are performing in the current period.

Nike shares closed Monday at $88.40, down about 19% so far in 2024, significantly underperforming the S&P 500's roughly 21% gain.